It's high time we put power back in hands of the right investors

They can similarly build up a massive voting stake, easily up to 20%, when they have no financial interest in the company. They do this by using contracts for difference, stock borrowing and other devices that give them the benefits and voting rights of owners without their having to do anything as common and oldfashioned, or costly, as buying the shares.

This poses a huge problem for boards of directors, who have to be accountable to shareholders. But which shareholders do they listen to when different groups want different things, and some of those with votes may well not be shareholders in the conventional sense at all?

How do they distinguish between engaged activist investors, who may tell them uncomfortable truths they don't want to hear but have the longterm interests of the company at heart, and "drive-by activists", who may whisper seductive tales of optimising shareholder value but whose real interest is in extracting cash from the company now, even if that leaves it debilitated and unable to cope with tough times in the future?

Tomorrow's Company, the thinktank that has an enviable record for putting its brains in areas most people fear to venture, said this week that, sponsored by pension-fund management group Hermes, it is to investigate "What's happening to ownership?" The comments above show why it is needed. Ownership patterns are changing, and perhaps the rights and obligations of ownership need to change too.

The think-tank's founder director, Mark Goyder, points to the increasing emphasis on trading and short-term share-price movements at the expense of ownership obligations and disciplines, the blurring effect on clear thinking of the successive witch-hunts against hedge funds, private equity and sovereign wealth funds, and the need for clear thinking on what obligations owners have, and how these marry with the responsibilities of directors.

We all have a stake in this. It is well-known in the City, but insufficiently realised in the country at large, that most of the rewards of growth reflected in improved corporate performance and higher share prices go to the fund managers and other intermediaries, not the clients.

An investment banker once said he saw his activities as a tax on the saving classes, but it is not just his profession. The independent financial advisers, fund managers, pension consultants, custodians, privateequity houses and insurance and pension management companies between them suck out all the gain. The client, if he gets tax relief, may come out ahead - but very few do. The intermediaries have hijacked share ownership, and exploit it for their own benefit.

The public don't understand what is going on, but they are not blind. They see the City bonuses at one end of the system and their wiped-out pensions at the other, so they know the system is no longer working as it should. But this unease gradually turns to resentment and alienation. The people of the country own the stock market through their pension and insurance policies, but they no longer feel that sense of ownership because they don't see the rewards. Instead, they are getting progressively more alienated from the process of wealth creation.

This is potentially a huge threat to business in this country. Ask yourself why the Government can introduce hugely damaging legislation on capital gains tax and non-doms - laws that have the potential to severely undermine the wealth-creating potential of this country - and do so to a chorus of voter support. The shriller the protests from the City, the greater the popularity with the voters.

These voters no longer believe the system belongs to them and works to their benefit. If they and, by extension the politicians, no longer feel a commonality of interest with the process of wealth generation, we are storing up huge problems for ourselves. That is why this latest venture from Tomorrow's Company comes not a moment too soon.

SOVEREIGN wealth funds just can't win. A group of them made a presentation in Gteborg a few days ago to the International Corporate Governance Network, a body of fund managers dedicated to responsible ownership and good governance.

The funds assured the group that they were passive investors who would absolutely not interfere with the way companies were run, nor seek to influence a board's strategy. The listeners were appalled. Influencing strategy was exactly what they thought the sovereign funds should do.